British smokers really are a determined bunch. Despite all the government's
and force them to quit - from the gruesome pictures introduced on packs last October,
to new proposals to hide tobacco products from view in multiples from 2011 and independents from 2013 - latest figures suggest that so far the only real
sales losses have, predictably, resulted from the economic downturn.
Even the recession doesn't appear to be causing a huge drop in volumes overall, but rather a shift in consumers choosing cheaper alternatives to their usual premium brands . Currently worth £10.3 billion to the off-trade (Nielsen, year to Nov 2008 ), the cigarette market has seen a 1% increase in value and a dip in volume sales of
Richard Daniel, head of trade for British American Tobacco, says that the smoking ban in July 2007 has also meant a shift in where smokers choose to enjoy their
"The point of consumption has changed. There was initially a negative impact on industry volumes but these have recovered as people have altered where they are smoking - whether it's outside the pub or at home," he says.
"We've also seen
consumers moving away from premium brands like Lucky Strike, Dunhill or Vogue to value brands," Daniel says.
"The cheaper brands such as Pall Mall , JPS and Sterling are estimated to grow by 50% over the coming year. As consumers are getting more and more price conscious they are looking for quality brands at a good price."
Japan Tobacco International, which acquired Gallaher in 2007 and manufactures brands such as Benson & Hedges and Sterling, agrees. Jeremy Blackburn, JTI's head of communications, says: "The biggest recent growth trend has been in the 'super value' sector."
In October last year the company reduced the price of Sterling to move the range into this less expensive sector and has seen impressive returns.
According to Nielsen's figures, Sterling had an 8% uplift in sales from last year, just behind the other star performer
of last year, Benson & Hedges King Size Silver, which pipped it to the post with sales up 9%, thanks to its inventive slide pack.
Daniel says that rolling tobacco is another segment that is growing at a fast rate. "People are moving from the cigarette category into the loose tobacco category," he says.
Blackburn agrees: "The roll -your -
own sector is benefiting from increased purchases and is the fastest -growing tobacco sector, with sales increasing by 11.5% over the past year, according to Nielsen.
"Demand for larger pack sizes such as 25g and 50g packs has also increased."
Display ban fears
So what about the Department of Health's plans to ban tobacco displays - and what effect will this have on retailers?
The tobacco companies, unsurprisingly, believe the display ban proposals aren't based on sufficient evidence and could fuel the trade in illicit tobacco products, as well
hav ing a negative impact on small independent retailers.
says: "Around 13% of volumes consumed in the UK are counterfeit products, so you can imagine the impact on government coffers in terms of lost revenue on those products."
A spokesman from HM Revenue & Customs confirms this
figure. He says: "Thirteen per cent is the illicit market share
- which includes counterfeit cigarettes and cigarettes that haven't paid duty and are legally produced in another country."
When you're looking at hand-rolling tobacco the illicit market share goes up to a whopping 53%, which contributes to £1.7 billion of lost revenue overall, he says.
Health groups like Action on Smoking
& Health are lobbying the government to increase the tax.
Amanda Sandford, res-earch manager
at ASH, says: "We're facing a big problem of tobacco smuggling and, even though the latest government strategy has seen rates of cigarettes being reduced, more than half of hand-rolled tobacco in the UK is illicit, which is quite alarming.
"In a recession people will trade down as roll -your -own tobacco is so much cheaper than cigarettes. We'd like the government to increase tax on hand-rolling tobacco so there's less of a gap between the two."
Pressure from elsewhere
Last month OLN reported there was
pressure to scrap the proposals for a
ban on tobacco displays after a report from the Canadian Convenience Stores Association showed it resulted in 23
in Ontario and 12 shop closures a week in Quebec.
Back in February, the New Zealand government scrapped plans to ban displays in shops.
Katherine Graham, campaign manager for the Tobacco Retailers' Alliance, says
plans to put tobacco under the counter in the UK
are included in the Health Bill, which is set to go to the report stage in the House of Lords around April 20.
She says: "We'll continue to lobby the government and provide support
for retailers to contact their local MP about this issue."
Iain Watkins, Imperial Tobacco's UK trade communications manager, says: "We do not believe these proposals will be effective in achieving the
government's objective to reduce smoking rates.
"We think existing legislation to crack down on under-age smokers should be rigorously supported and enforced . Today's proposals will do little except accelerate an increase in illicit trade and hit legitimate retailers in their pockets. This crackdown should be supplemented with additional resources to support Trading Standards' efforts to tackle illegal selling."
adds: "The distinction between tobacco products that are sold legally and counterfeit or other non -UK duty paid tobacco - that is illegally traded on street corners, in pubs and at car boot sales
- will become further blurred.
"There is simply no evidence from other markets that display bans reduce smoking rates . This is a view echoed by New Zealand Prime Minister John Key, who said during a TV interview that the call to ban tobacco displays from shops did not have the support of the
government because 'there is no international evidence that it actually works
and it's hugely expensive to do it'.
"The government should recognise that there is considerable cross-party support for retailers, who have real concerns about the huge work and cost burden that display bans would create for them."
1, 2009, it will become illegal to sell cigarette packs in the UK that do not contain
warnings, so retailers must sell through existing cigarette stock with rear text health warnings by Sept
30, 2010 to sell through all cigars, pipe tobacco and roll -your -own that do not contain
pictorial health warnings.
New product developments
April 2009: Launch of a range of four limited edition pack designs for Sovereign. Available for six weeks, the packs were launched nationally to all channels on April 1. The designs feature cityscapes on both Sovereign 10s and 20s packs.
March 2009: Launch of Golden Virginia Yellow, available in 12.5g, 25g and 50g packs.
February 2009: New packaging for Benson & Hedges Gold and Silver brands. The packs feature a modernised Benson & Hedges typeface and barrel logo, whil e the red seal was developed into a
triangle design. JTI also launched a range of limited edition pack designs for Mayfair King Size Smooth.
December 2008: Silk Cut range of cigarettes extended with the launch of Silk Cut Menthol.
November 2008: JTI launched its first range of 'super slim' cigarettes in the UK with Silk Cut Super
October 2008: Price -marked packs for Sterling launched, moving the brand into the 'super value' sector.
Miniatures lead the cigar market
Miniature cigars continue to drive growth in the total UK cigar sector, accounting for 53% of sales, and the category as a whole
is in growth by 3%
, according to Nielsen, for the year to Dec 2008.
Time -poor and venue -restricted smokers find it a lot easier to smoke miniatures rather than small -size cigars, a trend that has been developing in recent years. Henri Wintermans has launched Café Crème Express this
month in response to this trend.
The express version are smaller
than traditional miniature cigars.
says: "We are extremely excited at the launch of Café Crème Express and expect it to be immensely popular with adult cigar smokers. Sales trends show
consumer behaviour has shifted in favour of miniature cigars as the smoking ban has limited
Henri Wintermans has brought the distribution of the Café Crème family in-house, and retailers who have any questions should call
0844 801 1935.
Since the introduction of the smoking ban in July 2007, the market has remained strong. Anecdotal evidence suggests smokers have not given up but adapted, smoking one or two less cigarettes a day. A review of the smoking ban legalisation is due to take place in 2010 and
tobacco companies believe there is sufficient evidence to warrant consideration of
New penalties for under-age sales
This month, increased sanctions in England and Wales came into force to penalise retailers who persistently break the law by illegally selling tobacco to customers under the age of 18.
The sanctions may be imposed in addition to existing penalties, such as fines of up to £2,500, and come in two forms:
order - prohibiting an offending business from selling tobacco for up to 12 months
order - prohibiting a named individual within the business from selling tobacco for up to 12 months.
Where a person is convicted of making an illegal sale to anyone under the age of 18 and, on at least two other occasions within a two-year period has committed other similar offences, a sanction may be applied for.
To prevent under-age sales of tobacco there are a number of measures you can take, including:
Maintain a proof-of-age policy ( for example,
N o ID, No Sale
Ask to see valid photo proof of age ( for example, PASS -accredited proof -of -age cards such as Citizencard)
Keep a refusals or incident log ( like the
N o ID, No Sale
Train staff on this policy.
JTI is launching tobaccoretailing.com
to help retailers understand the new proposals.